Marginal note:Exception

3. If a registrant makes a supply in Ontario to a person and credits a qualifying amount to the person in respect of the supply, the registrant is not required to include under subsection 223(1) or (1.1) of the Act tax under subsection 165(2) of the Act, or the rate of that tax, in the total tax payable or the total of the rates of tax payable in respect of the supply.

Marginal note:Penalty for misreporting

• 4. (1) If a registrant makes a supply in Ontario to a person and credits a qualifying amount to the person in respect of the supply and, in determining the net tax of the registrant for a reporting period of the registrant, the registrant deducts an amount representing all or part of the qualifying amount or fails to add an amount of tax, representing all or part of the qualifying amount, that became collectible from the person in respect of the supply in the reporting period, in addition to any other penalty or interest under Part IX of the Act, the registrant is liable to a penalty equal to the amount determined by the formula

  A × [5% + (1% × B)]

  where

  A 

  is the amount (in this subsection referred to as the “misreported amount”) that the registrant deducted or that the registrant failed to add; and

  B 

  is the lesser of five and the number of complete months that are included in the period that begins on the day on or before which the return in which the registrant deducts, or fails to add, the misreported amount is required to be filed and ends on the earlier of

  • (a) the day on which the registrant reports the misreported amount and identifies the reporting period to the Minister in writing or in any other manner satisfactory to the Minister, and

  • (b) the day on which the Minister sends a notice of assessment that includes an assessment of the net tax of the registrant for the reporting period taking into account the misreported amount.

• Marginal note:Penalty for delayed filing

  (2) If a registrant files an application for a particular credit under subsection 2(1) equal to all or part of a qualifying amount more than four years after the day on which the registrant credited the qualifying amount, the registrant is liable to a penalty equal to the amount of the particular credit.

• Marginal note:Waiving or cancelling penalties

  (3) The Minister may, on or before the day that is 10 calendar years after the end of a reporting period of a registrant, or on application by the registrant on or before that day, waive or cancel all or any portion of any penalty payable by the registrant under subsection (1) in respect of a return for the reporting period.

• Marginal note:Waiving or cancelling penalties

  (4) The Minister may, on or before the particular day that is 10 calendar years after the day on which a registrant filed an application for a credit under subsection 2(1), or on application by the registrant on or before the particular day, waive or cancel all or any portion of any penalty payable by the registrant under subsection (2) in respect of the credit.

Marginal note:Deduction — section 212.1

5. If tax under section 212.1 of the Act is payable by a person and all or part of that tax is an amount equal to a qualifying amount that is credited to the person under the Ontario regulation, in determining the amount required to be paid and collected under section 214 of the Act, the qualifying amount is to be applied as a deduction from that tax.